Dr. Ecommerce Home


Ask Dr. Ecommerce a question

Q&A Alert
Latest Questions
Archives 2001
Archives 2000
Archives 1999
FAQ
Legal questions
European Institutions
Nat'l & local government
Technologies
Marketing & Selling
Definitions and Philosophy
How do I do it?
Money
General e-commerce

eThesis home
Universities and schools
eThesis best links

About Dr. Ecommerce
Discussion lists
In the news
Dr. Ecommerce speaks out

Board of experts
Legal guide
Statistics

11 Jan 2001, Switzerland

Dear Dr. Ecommerce

How can I accept credit (or even Debit) cards on my site?
Additionally, who decides on the percentage which the card companies (such as VISA, Mastercard or Amex) are to charge?

Ari

Dear Ari:

You need a merchant account, which you normally get from a merchant bank. That bank will also explain how to process credit card transactions and provide you with the equipment you need. You may have to buy or lease equipment and you will normally pay a percentage of each sale - usually around 1-3%. Sometimes there may be a small additional fee for each transaction. These fees are determined by the bank. The bad news is that small firms and Internet companies are both considered high risk and cost the banks more per transaction to process - so you generally pay the highest rates.

Clearly, the place to start, then, is with your bank. Ask if you can set up a merchant account with them. If not, ask for a recommendation for a bank that can help. There is certainly no shortage of banks in Switzerland!

If you are unable to set up a merchant account via the banks, then look into third party payment services like Paypal - http://www.paypal.com (please note, I have never used PayPal and cannot vouch for them in any way). Such services process credit card payments for you and, if the number of transactions you have is quite low, may work out better than your bank (banks often require that you have a certain minimum level of sales, which may not be the case with a new Internet company). If you opt for this method of accepting credit card payment, make sure you check the terms of the agreement carefully and ask a few of their clients about the quality of service.

American Express, unlike the other credit cards, operates its own merchant accounts. If you want to accept American Express, you will have to contact them directly.

Finally, you should be aware that credit card payments over the Internet are risky and it is the merchant who bears almost all of the risk. If a customer is at all unhappy with a purchase, she can normally contact her credit card service (probably her bank), complain and normally the credit card company will do a charge back - that means they will take the money away from you and possibly fine you. As a result, you will be out of pocket for the cost of your product and shipping. Assuming you are an honest merchant, there are two reasons why you might have problems with chargebacks:

1. There is a misunderstanding. This is why you should make it very obvious on your web site how a customer can contact you if she is unhappy with her purchase. After all, if you can resolve an issue before she complains to her credit card company, it will make things much easier (and cheaper) for you.

2. The customer is not honest. Unfortunately a lot of crooks have discovered that, thanks to the fact that credit card companies are quick to do chargebacks, it is relatively easy to defraud Internet merchants, particularly small ones.

This is a risk you will have to take and it is worth talking to your bank and other Internet merchants about chargebacks, fraud and how to minimise your risks.

Good luck,

Dr. Ecommerce

Return to Frequently Asked Questions

What do you think? Join the Dr. Ecommerce Talk discussion forum and share your opinion

Got a question for Dr. Ecommerce?